Cirzoveto v. Aig Annuity Ins. Co.

625 F.Supp.2d 623

Ronald CIRZOVETO on behalf of himself and all others similarly situated, Plaintiff, v. AIG ANNUITY INSURANCE COMPANY, Defendant.

Civil Action No. 2:06-CV-02534-BBD-STA.

United States District Court, W.D. Tennessee, Western Division.

May 6, 2009.

COPYRIGHT MATERIAL OMITTED

Anthony Charles Pietrangelo, Jonathan P. Lakey, Pietrangelo Cook, Memphis, TN, Joseph H. Aughtman, W. Daniel Miles, III, Beasley Allen Crow Methvin Portis & Miles, Montgomery, AL, Edward M. Holt, Maynard Cooper & Gale, P.C., Birmingham, AL, for Plaintiff.

Edward M. Holt, Jeffrey M. Grantham, Maynard Cooper & Gale, P.C., Birmingham, AL, Nathan A. Bicks, Taylor A. Cates, Burch Porter & Johnson, Memphis, TN, for Defendants.

ORDER GRANTING DEFENDANT AIG ANNUITY INSURANCE COMPANY'S MOTION FOR SUMMARY JUDGMENT

BERNICE BOUIE DONALD, District Judge.

I. INTRODUCTION

Before this Court is Defendant AIG Annuity Insurance Company's ("Defendant" or "AIG Annuity") Motion for Summary Judgment (D.E. # 81). As discussed below, Defendant's motion is due to be granted.

II. STATEMENT OF FACTS

On March 4, 2004, Mr. Ronald Cirzoveto ("Plaintiff') purchased an Eagle Nest Annuity for $46,684.45 that was designed and issued by AIG Annuity and sold by Union Planters Bank.¹ (D.E. # 88, Ex. A pp. 75:9-79:11). (Id.) The annuity paid 4.6% interest in year one, and at least 2.0% annual interest after the first year. (D.E. # 88, Ex. B p. 5). AIG Annuity designed the subject annuity product such that all expenses, including anticipated interest credited to an annuity owner's contract, were considered when determining the initial base rate of interest. (D.E. # 112-2, Ex. A p. 78-79).

In conjunction with purchasing the annuity, Plaintiff signed an Owner Acknowledgment Form ("Acknowledgment"), acknowledging that he had read and understood the disclosures regarding, among other contract features, the payment of interest rates and assessment of withdrawal charges. (D.E. # 89-5, Ex. B p. 2 and D.E. # 89-3, Ex. A part 2, p. 109:10-18) Specifically, the Acknowledgment form provided that the first year interest rate would be 4.6%, that it included a 2.15% enhancement payable for the first twelve (12) months only, and that after the first year, "the effective annual interest rate would be declared from time to time by the Company's Board of Directors and is guaranteed to be at least 2.0%." (D.E. # 89-5, Ex. B p. 2) The acknowledgment also contained a Withdrawal Charge Schedule illustrating withdrawal charges during the first five years of the annuity. (Id. p. 2). The annuity contract also contained a premium guarantee whereby Plaintiff would receive his entire premium, notwithstanding any applicable early withdrawal charges, if he decided to surrender his contract in full. (D.E. # 89-5, Ex. D, pp. 4-5). Plaintiff did not read the application, acknowledgment form or annuity contract when he purchased his annuity. (D.E. # 89-3, Ex. A. Part 3, p. 113:22-24).

Plaintiff made a series of partial withdrawals from his annuity and ultimately surrendered the annuity in August, 2005, less than eighteen months after the date of purchase. (Id. pp. 121:21-122-2). Upon surrender, Plaintiff received his entire premium, less previous partial withdrawals. (D.E. # 89-5, Ex. # p. 26).

III. STANDARD OF REVIEW

Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits ... show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." FED.R.CIV.P. 56(c). The Sixth Circuit has explained that the Court must view the evidence "in the light most favorable to the non-moving party and draw all inferences in its favor," but cautions that "[n]ot just any alleged factual dispute between parties will defeat an otherwise properly supported motion for summary judgment; the dispute must present a genuine issue of material fact." Tri-Health, Inc. v. Bd. of Comm'rs, 430 F.3d 783, 787 (6th Cir.2005) (citations omitted). "Summary judgment is appropriate if a party who has the burden of proof at trial fails to make a showing sufficient to establish the existence of an element that is essential to that party's case." Beecham v. Henderson County, 422 F.3d 372, 374 (6th Cir.2005). To avoid summary judgment, the non-moving party must produce specific evidence showing there is a genuine issue for trial, and cannot merely rest on allegations. Meyers v. Columbia/HCA Healthcare Corp., 341 F.3d 461, 466 (6th Cir.2003); see also Hopson v. Daimler-Chrysler Corp., 306 F.3d 427, 432 (6th Cir.2002).

IV. DISCUSSION

A. AIG Annuity Did Not Breach the Contract with Plaintiff.

Plaintiffs Complaint, which was filed as a putative class action, alleges claims for negligent and fraudulent misrepresentation, concealment, breach of contract, breach of fiduciary duty, negligent and/or wanton hiring, supervising and training, violation of Tennessee's Consumer Protection Act and conspiracy. (D.E. # 1). Because Plaintiffs annuity contract is at the heart of his Complaint, the Court will discuss his breach of contract claim before addressing his fraud and consumer protection act claims.²

In Count Six of his Complaint, Plaintiff alleges that the annuity contract "expressly and or impliedly guaranteed Plaintiff a 2.15% bonus enhancement, to be credited in the first year of issuance, that would permanently realize and gain the full benefit thereof." (D.E. #1 ¶ 58). Plaintiff claims Defendant breached the contract "by proactively recouping the bonus enhancement and forcing Plaintiff to pay for his own bonus enhancement through an undisclosed `self-financing' scheme." (Id. ¶ 58). To prevail on a breach of contract claim, a plaintiff must prove (1) the existence of an enforceable contract, (2) nonperformance amounting to a breach of the contract, and (3) damages caused by the breach of contract. ARC Lifemed, Inc. v. AMC-Tennessee, Inc., 183 S.W.3d 1, 26 (Tenn.Ct.App.2005) (quoting Custom Built Homes v. G.S. Hinsen Co., Inc., 1998 WL 960287 (Tenn.Ct.App. Feb 2, 1998)). Defendant asserts that Plaintiff cannot establish the second and third elements.

1. AIG Annuity fully performed under the contract.

Plaintiff's breach of contract theory is not a traditional theory involving a breach of a specific term within the four corners of the contract. Rather, Plaintiff claims that the partial disclosures regarding the "bonus" interest rate in the application and owner acknowledgment form created a "reasonable expectation" that the 2.15% "bonus" paid in year one would not be recouped in subsequent years through lower renewal crediting rates. (D.E. # 112 pp. 18-20). In analyzing a similar theory a court in the Middle District of Tennessee found that "the terms of this Policy are clear and unambiguous, and Plaintiffs asserted beliefs or assumptions cannot change those terms." Thompson v. American General Life and Accident Ins. Co., 448 F.Supp.2d 885, 888 (M.D.Tenn. 2006). Similarly, Plaintiffs asserted beliefs and assumptions about how Defendant should have designed its annuities do not change the actual terms and conditions of the annuity in question in this case. Cf. Phillips v. American International Group, Inc., 498 F.Supp.2d 690, 695 (S.D.N.Y. 2007) (holding "where the interest rates defendants paid in subsequent years complied with the express terms of the Annuity Contracts, those rates cannot be construed to breach any independent promise embedded in the word `bonus'").

The Contract documents set out the rates and terms of interest required under the Contract. (D.E. # 89-5, Ex. D p. 2). Defendant was obligated to credit Plaintiffs annuity 4.6% interest in year one, and at least 2.0% thereafter. (Id.) Defendant's records reflect, and Plaintiff does not dispute, that Defendant credited Plaintiff's annuity with 4.6% interest in year one, and with an annualized rate of 2.45% for the period of the second year before Plaintiff surrendered his annuity. Thus, Plaintiff received all of the interest to which he was contractually entitled and Plaintiff has failed to show that Defendant breached any term of the annuity contract.

2. Plaintiff Suffered No Damages.

Plaintiff has also failed to produce substantial evidence that he has suffered damages. In determining damages in breach of contract actions, "the governing principle is to compensate for damages actually incurred `by placing the plaintiff in the position he would have occupied had the contract been fulfilled in accordance with its terms.'" Safeco Ins. Co. v. City of White House, Tennessee, 133 F.Supp.2d 621, 630 (M.D.Tenn.2000) (quoting Grantham and Mann, Inc. v. American Safety Prods., Inc., 831 F.2d 596, 601 (6th Cir. 1987)).

Plaintiff requested the full cash surrender value of the annuity less than eighteen (18) months after he purchased it. (D.E. # 89-5 Ex. A, p. 26). By cashing out his annuity so quickly after he purchased it, Plaintiff was entitled to receive only the value of the premiums he had paid, less any previous withdrawals he made from the annuity. (D.E. # 89-5 Ex. D, p. 6) Plaintiff does not dispute this provision of the annuity contract. (Id. at Ex. A pp. 114, 118:4-120:24). Plaintiff in fact received the entire $46,684.84 he had paid for the annuity. (Id. Ex. E, p. 26). Even giving Plaintiff every benefit of the doubt and assuming that he never withdrew any money before he surrendered his contract, he would not have been entitled to anything in excess of the $46,684.84 he deposited at the time he surrendered the contract. (Id. pp. 114:20-116:1). That is, pursuant to the terms of the annuity, because Plaintiff surrendered his annuity so quickly, he received (and would only be entitled to receive) a refund of the premium—exactly what he received. Thus, Plaintiff has failed to create a question of fact with respect to damages, and he cannot establish a breach of contract claim.

B. Misrepresentation

Counts One and Two of Pl...